Friday, June 12, 1998 Last modified at 1:36 a.m. on Friday, June 12, 1998

Senate considers capping tobacco attorneys' fees at $1,000 an hour

By EUN-KYUNG KIM

Associated Press Writer

WASHINGTON (AP) - Hailed as heroes for muscling the tobacco industry into paying sick smokers' medical bills, attorneys are suddenly being called the bad guys for trying to collect fees that lawmakers say run into billions of dollars.

Some senators want to limit lawyer fees in the cases to $1,000 an hour. They failed to convince their colleagues, however, and a measure to cap the fees - as an amendment to the tobacco bill - was set aside Thursday by a 50-45 vote.

A $1,000 an hour fee is a bargain compared with the amount that attorneys would get without any cap, according to some lawmakers and legal experts.

The private attorneys who helped Texas win a $15.3 billion tobacco settlement, and now stand to get $2.3 billion of that, put in about 25,000 hours of work - ultimately making $92,000 an hour, estimated Lester Brickman, a legal ethics professor at Cardozo Law School in New York. The standard rules of ethics prohibit lawyers from charging more than a "reasonable fee," he said.

"What is reasonable is in the eye of the beholder, but if there is any ethical requirement whatsoever, then surely these fees exceed the bound of reasonableness," Brickman said.

Many of the attorneys battling the tobacco companies, however, didn't actually charge their clients any specific hourly fee.

Gregory Joseph, chairman of the American Bar Association's litigation section, noted that such attorneys took on the tobacco companies on a contingency basis, under which lawyers don't get paid unless they win, and then get a percentage of the take.

"When these cases were undertaken, no plaintiff had ever recovered a dime and they had shown absolutely zero willingness to settle," Joseph said. "Nobody ever contemplated that the recoveries would be as giant as they would be."

Some lawmakers argued that without applying fee caps on tobacco-related legislation, attorneys stand to gain billions of dollars.

"What we have here is a bill that has but one constituency and that constituency is a large group of vultures who want to bring down this (tobacco) industry and then feed on its rotting flesh," said Sen. Phil Gramm, R-Texas. "And the biggest lead vulture in this case is plaintiffs attorneys who are going to make $92,000 an hour on this bill."

The Senate debate had an unspoken political subtext, whatever the arguments about the value of a lawyer's work. Trial lawyers are reliable donors to Democratic candidates for Congress, and since taking power in 1995, the GOP majority has proposed a number of measures to rein them in. One measure, for example, which has yet to pass, would limit the amount of punitive damages that could be awarded in certain lawsuits.

In the Senate vote Thursday, 38 Democrats and 12 Republicans voted successfully to table the fee-cap proposal, and 41 Republicans and four Democrats voted to keep it alive.

Opponents of the measure said the issue goes beyond politics.

Rich Hailey, president of the Association of Trial Lawyers of America, said capping attorneys' fees is an attempt to limit free enterprise. The federal government, he argued, does not regulate the fees charged by doctors, accountants or plumbers.

"Is Michael Jordan worth the millions he gets? I don't know, but the Bulls think so. Maybe the Congress should regulate the NBA," Hailey said. "When you start talking about the amounts, the issue gets missed. The issue is the private right to contract for goods and services."

Joseph of the ABA's litigation section said it is not unusual for attorneys in Washington or Wall Street law firms to earn more than $600 an hour.

Gramm said the legal battle in the Senate isn't an attempt to be tightfisted with attorneys.

"How many people in America would figure that they were being cheated if they were getting $1,000 an hour in a fee for work they had done?" he said.

Edwin Barton, a tax attorney in Marshalltown, Iowa, said he wasn't convinced about the benefits of the measure. The federal government shouldn't try to tell private professionals how much they may charge, he said.

"Of course, it doesn't really matter to me because I'll never make that kind of money," he said.